This article will help you understand how your payment files are funded.
There are four methods for funding your payment files, wire, reverse wire, ACH debit, or ACH credit. You can choose any of these during the onboarding process. In this guide, we explain the funding process for each method, their exceptions, and how refunds are processed.
The article explains the following:
- ACH Debit funding
- Debit Exceptions
- ACH Credit funding
- Credit Exceptions
These are important concepts to understand as you learn how to fund payment files:
- ACH - An automated clearing house (ACH) is an electronic funds-transfer system run by the National Automated Clearing House Association (NACHA). ACH is part of the process for funding and processing payment files.
- Debit Funding - An ACH debit transaction is initiated by Finexio once a payment file is submitted. This method withdraws money from an authorized buyer account. This money is used to fund and process the payment file. A payment file is not processed until funds are received.
- Credit Funding - An ACH credit is initiated by the authorized buyer to fund a payment file. This method requires the buyer to deposit funds into a Finexio trust account to fund payments. A payment file is not processed until funds are received.
- NOC - The ACH network provides Notifications of Change (NOCs) —notification that something about a bank account has changed. After receiving a NOC, Finexio corrects subsequent payments for the affected bank account using the updated information.
- ACH Authorization - To authorize a transaction through ACH, a buyer must provide essential banking information, including the bank name, account number, and routing number. Only with this information can Finexio enable credit or debit transactions on the buyer account. To enable payments and refunds, ACH authorization must be given for both credit and debit transactions.
- Refund - This is a return of funds to a buyer that were made available for a submitted payment that was not completed.
ACH Debit Funding
This is the Finexio-preferred method for funding a payment file. An ACH debit transaction withdraws money from an authorized account triggered by the submission of the payment file. Once the payment file is successfully submitted, the buyer will receive a notification displaying the total value of the file and the funds to be pulled from the buyer's account. Debit funding will process on the same day for payments submitted before 4:00 PM EST, payments submitted after will process the next day.
In the customer’s file management portal, the payment file will be moved to the Pending tab until the file is funded.
Once the funds have settled, the system will match the funds received to the amounts in the payment file to be processed. If there are no exceptions, the payments will be disbursed, and the file will be moved to the Complete tab.
For this method to work, Finexio needs to be whitelisted by the buyer’s bank. The buyer must ensure that Finexio will not encounter a debit block when it pulls funds from the buyer's account.
If the buyer has a debit block on their bank account, the buyer must provide their bank with the following details which pertain to the Finexio banking partner (CASS):
- Company Name: CASS COMM BANK
- Company Identification: 9000005111
- Company Entry Description: CONC ACCTS
- ODFI Identification: 08100060
NOTE: “Drawdown” is a legacy name for payment file funding type.
With debit funding, funding may not complete successfully for these reasons:
- Incorrect information
- Insufficient funds
- Funding cancelation
- Notice of change
Explanations for each exception are given below.
If the payment file funding is submitted to Finexio but is rejected due to incorrect information, the buyer will receive a notification that the funding has failed. Below is how Finexio will help resolve each issue to ensure a quick resolution.
Funding is stopped due to incorrect information because either the routing number or the account number is incorrect. Finexio will need to reach out to the buyer to confirm the banking information and that there are no debit blockers for Finexio funding attempts. Once the banking information has been corrected and confirmed, the information will be updated in the system and the file will need to be resubmitted. This exception can also be triggered if the buyer does not approve the debit request.
If funding is rejected due to insufficient funds, the buyer will receive a notification. The buyer will need to either update their banking information with Finexio or deposit sufficient funds into the account to fund the debit request from Finexio. Once the issue has been resolved, the buyer must notify Finexio to reinitiate the debit funding.
The funding cancelation is initiated by the buyer through the Portal. The buyer can click the support button on the bottom right side of the File Management page.
The buyer will need to inform Finexio of which file the funding was intended to cover. Funding can only be canceled if the payment status has not been updated to Complete. The funds can take 2-3 business days to be sent after the request is submitted to Finexio. The file will stay in the Processing tab until the file is funded or canceled. Funding cannot be canceled once payments have been disbursed.
Notice of Change
In the case of a notice of change, nothing needs to be done by the buyer. A notice of change occurs when something about the bank has changed. For example, if funding is submitted to a bank for which the bank name has changed, then our banking partner will receive a NOC that lists the corrected name. The funding will process successfully and the information will be updated by Finexio’s banking partner.
ACH Credit Funding
ACH credit funding is when the buyer initiates or pushes the file funding to Finexio’s funding account. To initiate credit funding, Finexio needs to provide their funding account information to the buyer during the onboarding process.
Once a customer submits a payment file to Finexio, they will receive an email notifying them of the dollar amount to push to Finexio. The notification is sent to the user along with any previously-selected contacts who would also like to receive the notice. The notification shows how many payments were submitted and the total value of the payment file that is expected to be credited to Finexio for payment processing.
Similarly to credit funding, the payment file will be moved to the Pending tab until the file is funded.
Once the funds have settled, the system will match the funds received to the amount in the payment file to be processed. If the amounts match, the payments will be disbursed and the file will be moved to the Complete tab.
There are three possible exceptions to successful credit funding. Two exceptions are initiated if the funds pushed to Finexio do not match the total amount of payments submitted in the file. The third exception is initiated by the buyer if they choose to cancel credit funding after it has been pushed.
- Underfunded payment file
- Overfunded payment file
- Canceled funding
Underfunded payment file
If the file is underfunded, a notification requesting the difference will be sent. The file will remain in the Pending tab until all of the funds have been received. Notifications will continue to the buyer’s email daily until it is resolved.
Once funding is settled and the funds are disbursed, the file will be moved to the Complete tab.
Overfunded payment file
If the buyer happens to send excess funds to Finexio, then the file is overfunded. The file will be processed and moved to the Complete tab. The buyer will receive the following email notifying them the funds will be credited back to their account during the processing of the next refund cycle.
Funding cancelations are initiated by the buyer through the Portal. The buyer can click the support button on the bottom right side of the File management page.
The buyer will need to inform Finexio of which file the funding was intended to cover. Funding can only be canceled if it is requested within the same day. If the cancelation request comes in the day after the funding was initiated, there could be an extra delay for the refund. The funds can take 2-3 business days to be sent after the request is submitted to Finexio. The file will stay in the Processing tab until the file is funded or canceled. Funding cannot be canceled once payments have been disbursed.
If there are funds that need to be sent back to the buyer, they will always be processed by crediting the funds to the buyer’s account. Refunds can be necessary when there are excess funds due to overfunding a payment file, or from a payment being sent back to the buyer. Refunds will be directed back to the buyer's account on Fridays. The buyer will receive a remittance report explaining the purpose of the refund.